Wall Street Bank unloads $5.5 billion in debt, linked to Elon Musk’s takeover of Twitter
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Wall Street Bank paid off debts on Elon Musk’s $44 billion takeover of Twitter’s debt, selling most loan packages to investors on Wednesday, allowing many lenders to exit one of the toughest acquisition financings in recent years .
According to the briefing on the matter, banks were able to sell $5.5 billion in term loans, after selling about $100 million in the same debt loan last month. The debt sold on Wednesday was only discounted, selling for 97 cents in US dollars.
The deal is a critical moment for banks, which must acquire ownership of their own business for Musk in 2022, now renamed X, and wider market volatility reduces enthusiasm for debt.
One person involved in the transaction said: “I don’t want to add sugar to it, and the bank doesn’t want to hold this position.”
The bank, led by Morgan Stanley, Bank of America and Barclays, now also holds $6 billion in debt related to the acquisition, which is considered to be more risky than loans sold in the past week. Mufg, BNP Paribas, Mizuho and Sociétégénérale also participated in the deal.
Bofa, Morgan Stanley, Barclays, BNP Paribas and Socgen declined to comment, while the other two banks did not respond to requests for comment.
Debt sales, including loans sold in January, attracted a wide range of high-profile groups including Castle, Apollo Global Management, Pimco and Diameter Capital. The group declined to comment.
Musk’s relationship with U.S. President Donald Trump and the return of some advertisers who had previously retreated from the platform have driven interest among investors in Twitter’s debt, people familiar with the matter said.
It turns out to be a saving grace for banks to fund transactions, as some hedge funds offer 2023 stocks to Morgan Stanley and others, while others take debt from theirs for only 60 cents. Cancel in hand.
A currency manager who made the deal added that it was a good time for the bank to sell, noting that “Elon’s cache. He is a FOP, the president’s friend.”
The company’s stake in Musk’s artificial intelligence company XAI also attracted investors, which the company’s Financial Times reported was worth $50 billion last year. This helps solve X’s own valuation and the company’s ability to repay its debts.
Musk’s chief banker Morgan Stanley proposed the deal in due course – given that debt investors were largely hungry by new buyouts to help the funds.
The bank restricts access to X’s financial information or parties to meetings with top X leaders, including CEO Linda Yaccarino, willing to write a considerable check. For some investors, this creates a sense of urgency.
According to the briefing of the matter, the interest rate on the debt exceeds the floating rate benchmark by more than 6 percentage points, more than 11%. Credit monitoring service Levfin Insights offers discounts, yields above 12%.
This is a huge attraction for investors, given that risky corporate debt yields have returned to their lowest levels since 2022, according to data from ICE Data Service.
Other reports by Harriet Agnew in London
